Fixed versus unitised
insurance cover

Terms like 'fixed cover' and 'unitised cover' don't help, especially if you're not too familiar with insurance.

So let's simplify them for you.

Insurance through super can help protect you financially if injury or illness prevents you from working. At Hostplus we offer Death, Total and Permanent Disability (TPD) and Income Protection insurance to eligible members.

When you take out insurance through Hostplus, you can choose either fixed or unitised cover. Basically, fixed cover means your cover generally stays the same while your premiums increase over time. Unitised cover means your premiums (mostly) stay the same while your level of cover decreases.

Your choice of cover will affect how much you pay in premiums and the level of cover you’ll receive as you get older – so it’s important to choose the cover that suits your needs. 

In this article, we explain these two options in more detail and highlight their key differences.  

As the name implies, the level of insurance cover you receive will be ‘fixed’ – it won’t change as you get older until you reach a certain age. This means if you take out $150,000 of Death cover through your super at age 35, your benefit amount will still be $150,000 whether you’re about to turn 45 or 55. It begins to taper off from age 61 before cover ends completely at age 70.¹

If you ever need to make a claim, fixed cover means you’ll know exactly how much you’re covered for. 

While that certainty may offer peace of mind at claim time, the premiums charged for fixed cover will increase as you get older. This is to account for the increased risk when a claim is made. 

Unitised cover is effectively the opposite of fixed cover. With unitised cover, you buy insurance cover in ‘units’. Each unit has a specific value, depending on your age and a range of other factors.  

Using the example from above, if you were covered for $150,000 at age 35, you might have had five ‘units’ of insurance cover, valued at $30,000 each. As you get older, the value of each unit, and therefore your level of insurance cover, will reduce. At age 45, each unit might be valued at $15,000. Assuming you still hold five units, your total insurance cover would be $75,000 – even though you’re still paying the same premium. 

So, while unitised cover may make budgeting for your premiums easier, the trade-off is that you may find your benefit amount is smaller than you thought when it comes time to make a claim.